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Gold prices set to fall on firmer dollar and uncertain inflation outlook

Gold prices were set to fall on Thursday, breaking their three-session winning run, as the metal's outlook remains uncertain. A firmer dollar weighed down the prices, and prospects of further interest rate hikes from the US Federal Reserve clouded the bullion's future. Spot gold was down 0.2% at $1,832.60 per ounce as of 0845 GMT, after hitting a one-week peak in the previous session. U.S. gold futures also fell 0.4% to $1,838.30.

On Wednesday, the Institute for Supply Management survey reported raw materials prices increasing last month, indicating that inflation could remain elevated for some time. While gold is considered a hedge against inflation, recent central bank rate hikes to bring down price pressures have affected appetite for the metal since it yields no interest.


Investors are keeping a close eye on the US central bank's policies, as officials were divided on Wednesday over whether to maintain tight monetary policy or implement more restrictive interest rates in response to high inflation data and a hot jobs market. Some believe that inflation pressures are temporary and should not lead to more interest rate hikes, while others suggest that additional measures are necessary to control rising prices.


The uncertainty surrounding the gold market's future is leading some investors to seek alternative investments. Some are turning to cryptocurrencies like Bitcoin, which have seen a surge in popularity due to their decentralized nature and limited supply. Others are diversifying their portfolios by investing in traditional assets like real estate and stocks.


In conclusion, gold prices are expected to fall as the metal's outlook remains uncertain. A stronger dollar and prospects of further interest rate hikes from the US Federal Reserve are weighing down the prices, while recent central bank rate hikes have affected appetite for the metal. Investors are keeping a close eye on the market and seeking alternative investments as a result of the uncertainty.


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